Increasing disposal IncomeSocial AnalysisBoycottYoung population -> western products, shopping is considered as entertainment

Expat population is growing

The life style is changing, more working more hours and more women in workforce -> one-stop shop and more ready-to-eat food Environmental AnalysisNo regulation concerning environment but AL Othaim is doing it as part of CSR (Cooperate Social Responsibility) Technological AnalysisInternet penetration is high -> website

Business intelligence reporting systems BI, Dashboard and data warehouse Legal AnalysisCertain products not to be soldCertain countries not to import fromCertain hours for trucks to deliver shipmentsSaudization and "Equal Employment Opportunity" Threat of New Entrants (LOW) Saudi grocery market is dominated by few competitorsIt transformed into the supermarket or hypermarket dominated businessThis powerful force had a great impact on the small traditional shopsit possesses a strong barrier for new companies who desire to enter the grocery market. sufficient capital because of large fixed costs and highly developed supply chains, distribution channels in strategic locations. Bargaining Power of Suppliers (Moderate) Suppliers of major grocery chains fear losing their business to the large supermarkets. Al Othaim has the advantage of being the 3rd largest market share in Saudi therefore It can get better promotional prices from suppliers Bargaining Power of Customers (Moderate to High) The switching cost is low Sloution -> IKTESAB loyalty card Yet, Al Othaim should constantly work to meet customer needsAlthough Al Othaim has adopted vertical integration by producing exclusive products but they are undifferentiated and standardThreat of Substitutes (Low) Small chains of convenience (Baqalah) which already exists yet it doesn't offer the same range of products and services as a supermarket. Online grocery store. However, there is no threat of this kind so far in Saudi Arabia due to the consumer behavior and cost of logistics. The Intensity of Competition (High) Market is dominated by larger players. Every player tries to outperform the others. Al Othaim is trying to offer innovative services such the development of an e-commerce website in response to changes in consumer behavior and to add a competitive advantage.PESTEL Analysis 5 Forces Model3. Internal EnvironmentResources TangibleFinancialTechnologyPhysicalIntangibleReputational ResourcesInnovation Resources Human Resources: DistributionLogistics Vertical integration Control operating costs VALUABLERARE COSTLY TO IMITATENON SUBSTITUTABLE Capabilities, Core Competencies and Competitive AdvantageValue-Chain Model AnalysisPrimary Activities Inbound logisticsIt includes the logistical tasks, which includes the receipt of goods from suppliers, storage of goods, handling & transportation of products. OperationsOutbound logistics

Delivering the product to the customer. Al Othaim tried to add value by offering home delivery service through the e-commerce website but wasn't successful.

Marketing and SalesEktisab Offer leaflets CSR activities, which serve as a good marketing tool for the company. Digital marketing campaigns such as e-mail ads, twitter account and newsletters 68% of the focus group participants mentioned that these activities are not interactive or creative enough to attract them. Support Activities ProcurementIn the focus groups, Al Othaim was rated fair to low in terms of products variety. The reduction in choice is damaging to the welfare of the company since consumers have less choice and are unable to purchase goods they desire. Consumers chose Al Othaim Markets for grocery shopping based on their lower prices and nothing else. Human Resource ManagementHigh retention percentage by providing good package for employees A commitment towards their employees to provide a good work environment. However, the Ministry of Labor pressure to hire more Saudis could effect the quality of service in the short term but will pay off at the end. Technology E-commerce website. However, the logistics but then turned it to just a static website that shows offers and products availability in store. Al Othaim has replaced over 400 points of sale Implemented a Dynamics systems to cover the needs of the back office.Finance Listed in TASI since 2007. Al Othaim can raise fund by issuing stocks. Hanadi AlhozaimiManal AlmadhiWadha AlsowayanWe aspire to sustain Al Othaim markets business in the retail industry in Saudi Arabia and have a remarkable position in the Saudi national economy map as a whole, and to help the company create more growth and prosperity by extending its business to regional level to access more consumers in the neighboring countries and to further the success story that has been launched decades ago during which genuine concepts has been established and sustained in serving local community and meeting consumer's needs.All Al Othaim cadres are functioning to reach objectives of the company, whether strategic or operational by setting up mechanisms that ensure a better balance between the company's internal objectives and those pertaining to our external consumers. The following are some of these mechanisms:• Tackle clients and their needs as a top priority• Comply with local traditions prevailing in KSA• Contribute to the improvement of local manpower• Build professional teams with broader and future vision• Sustain ties with partners in success such as vendors and suppliers• Focus on quality and high profile professional criteria • Quick response to the market changes • 7 hypermarkets• 68 supermarkets• 11 wholesale outletsTheir main activity:Importing, producing, exporting and selling grocery products to consumers.• Customer• Community• Employees

Saudi Arabia’s retail sector is the largest in GCC representing 42%

Food is the third most imported commodity by value

Major part of the Saudi retail sales will be driven by sale of foodproducts.

Retail sales is estimated to increase from US$83.3bn in 2011 to US$131.2bn by 2016, of which food sales’ contribution is expected to increase from 50% to 53%.

High demand for high-value foodsFood is the third largest imported commodity Increase of Disposal IncomeService orientated. Opening every day, operating hours, maintaining the shelves, and the stock. 82% of the focus group participants mentioned that they don’t like the interior design, look and lightningAl Othaim needs to reconsider the interior design Has the ability to control their operating costs so well that they are able to price their products competitively and able to generate high profit margins, thus having a significant competitive advantage. Al Othaim focuses on the creation of internal efficiencies that will help them withstand external pressuresAl Othaim doesn't focus on a niche market but rather at the broad market Mr. Abdullah Al Othaim once said in a documentary in YouTube “By selling a lot at a lower price you will achieve a lot of profit”. TacticsAl Othaim has the advantage of having a Real-Estate sister CompanyAl Othaim handles the logistics within the Kingdom Vertical integrationSaudization Cost leadership strategyRelated linked diversification strategy Entering real estate market in 2005Due to excess of cash and management skills. Retail sector is the fastest growing sector in Saudi Arabia. However, Al Othaim net profit dropped since the beginning of 2013. Although it started to recover in 2Q2013 but in Q3-2013 financial results remained lower than estimations.Reasons:Low variety of grocery products The interior design of Al Othaim supermarket specially that grocery shopping is considered entertainment Not strategic locations Doesn't accommodate the new Life styleone stop shopnon-grocery products ProductionPrivate label productsNon-food products

Outbound logisticsThe tangibles that have to be improved are those of store layout, parking facilities, trolleys Layout of supermarkets should complement the one-stop-shopThe interior design should be enhanced Make alliances with coffee shops Find strategic locations. MarketingInteractive and creativeProcurementInternational products and Healthy Living Product Line should be offeredTechnologySelf check out in storesRFID for inventory management Smart phone applications